Move from variable to fixed ? Family home + holiday home.

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applevenus

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Long time reader first time poster...

Currently on a variable rate mortgage with Permanent TSB. We have a good loan to value ratio. The mortgage is 225k and the house is worth in excess of 750k possibly more (detached 6 bed house with large extension work completed several years ago)

I don't like the fact that PTSB is now beginning to raise variable rates. I also doubt that the ECB rate will stay this low forever. I would prefer some certainty. Both myself and my wife work.

We have one other mortgage (interest only, variable) for an investment property. A 3 bed detached house in a small development in Gorey. Mortgage is just under 100k and the property has a value of approximately 200k, maybe a little less. This is a section48 property and the relief has just ended. It has done it's job (saved tax, provided a potential gain when we sell it) but we're not going to sell until we have a better understanding of where the market is going. The original plan was to sell this property as soon as the tax relief expired and pay off most if not all of our family home mortgage. (best laid plans eh ?)


What is the conventional wisdom on variable mortgages at this time ?
Should we seriously consider moving to a 5-year fixed rate mortgage for the family home ?
What about the investment property ? There is some rental income (long term holiday home management company rental) but not enough to maintain a full year mortgage payment so we are subsidizing this and clawing back interest payments on our tax return to minimize our on-going investment into this property.



My motivation is to have some certainty on our finances for the next 5 years and to avoid a situation similar the early 90s when interest rates when through the roof.

My initial look at AIB for example indicates we could probably lock into a 5 year mortgage for not much more than we are currently paying on an ever-increasing variable rate mortgage.


Opinions, suggestions all welcome.
 
Re the family home - AIB 5 yr fixed is a good idea at 3.86 - BOI have 3.99% 5 yr fix and they are still offering 750 towards legal fees for switchers. What is your current PTSB rate?

www.*****************.com
 
We were on 3.19% with PTSB for the family home, it just went up to 3.69% today. (that's 3.8% APR)

Spoke with them regarding fixing the rate and they offer 5 year fixed at 5.75% (APR 4.8%) and couldn't quote anything other than 5yr/10yr/15yr terms

AIB offer APR 2.84% (over 30 years)
AIB also offer APR 2.92% (over 25 years)

BOI offer APR 3.3% over 25 years and have that €750 legal fees offer.


It's a bit of a no brainer I think...
interest rates will only rise over the course of the next 5 years, I can go to AIB and immediately lower my payments.
My guess is that within a couple of years PTSB variable rate will be consistently above the fixed rate on offer from AIB.
I'll need to look into the associated life insurance as I'm guessing it won't be a simple matter of just re-assigning the policy to the new mortgage provider and we'll have to take out a new policy.

Is there anything else I should consider?
 
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applevenus said:
AIB offer APR 2.84% (over 30 years)
AIB also offer APR 2.92% (over 25 years)

BOI offer APR 3.3% over 25 years and have that €750 legal fees offer.
Click to expand...

Are these fixed rates or variable rates?

25 and 30 years are very long terms, wouldn't advise that.
 
They're 5 year fixed rates.

We plan to sell the 2nd property at some point in the next 10-15 years and clear the mortgage on the family home.

At the moment we prefer the longer term with lower payments. I realise it would cost more over the long term but we don't plan to keep the mortgage for the full term. It suits us to do this for the next few years.
 
Don't look at APR's when comparing fixed rates - they are meaningless really (for fixed rates).
The AIB rate is 3.86 for 5 years and BOI is 3.99 fixed for 5 years. See Here

The funny thing is - PTSB are advertising on their website a 5 yr fixed rate of 3.7% if you have an LTV of uder 50% (which you have) - but it does say "new business" - but it might be worth checking with them again. Ask about the gross rates not APR. Mention the website.
If you can get that 3.7% without any legal fees etc - then take it - otherwise I would go for the BOI offer if they are paying €750 towards legal fees.

How long is actually left on your mortgage and how much is still owing? You keep mentioning 25 and 30 years - but it sounds like you have had your mortgage a while - so you're not thinking of extending it for another 25 years are you?

www.*****************.com
 
Good points & thanks for the APR tip.

No, not thinking of extending for 25 years but using that as ready reckoner when doing calculations. Will probably go to a 20 year term. We still plan to clear the mortgage within the next 5-10 years in either case.

For clarity - there is 225k on the mortgage and there are 20 years left on it. LTV is good (<50%)

Yes the PTSB rates are for 'new business'. If they're not willing to budge then I'll have to consider BOI. I've been a PTSB customer for over 20 years and of course have the other mortgage with them so that might provide some leverage for me in my discussion with them.

I don't get the impression that their mortgage section on the 'phone will be of much help and perhaps I should speak with the branch where my accounts are.
 
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